Deciding between investing in silver or investing in gold can be difficult, because it is largely a personal choice. Silver and gold are both precious metals and make for good investments when you want to protect your wealth against inflation.
But there are serious differences between the two in terms of market size, volatility, and availability.
The silver market has always been, and will continue to be, much smaller than the gold market. The amount of bullion gold for investment available is estimated to be twice as much as that of bullion silver.
What’s more, the price of gold has been up to 97 times higher than that of silver during the last hundred years, making the gold market many, many times more valuable than the silver one.
The relative smallness of the silver market compared to the gold market makes silver more volatile. So much so that sudden rises or slumps in the value of silver are extremely common. Obviously, this makes investing in silver possibly more risky than investing in gold.
But also possibly more rewarding, since the price of silver can also grow faster than that of gold. 2010 is a good example of a year when the price of silver – at least in the first half of the year – has risen much more than the price of gold.
There are far more known deposits of silver in the earth than there are deposits of gold. While some believe that gold availability is going to dwindle in the years to come, since most of the major gold deposits have been already mined, nobody seems to worry about the availability of silver.
The greater availability of silver suggests that silver will not become nearly as expensive as gold. It also suggests that silver prices can more easily fall than gold prices, since the growing scarcity of gold will conserve the latter’s value.
So, Silver or Gold?
The essential things to consider are these:
· The gold market is much bigger than the silver market.
· Gold is, and will continue to be, much more valuable than silver.
· The price of silver can increase (as well as fall) more often and more significantly than the price of gold can.
· Silver deposits are widely available, whereas gold ones are growing scarcer.
All this means that neither silver nor gold is the better investment, but that you should choose the one most appropriate for your situation and purpose. Investing in silver can mean bigger return on investments in the short term, but also more risks, whereas investing in gold can mean more stability and fewer risks, but also smaller return on investments in the short term.
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